Portfolio Management Q115
| Investor | Expected Standard Deviation | Beta |
| Daniel | 30 | 1.60 |
| David | 25 | 1.80 |
| Diana | 20 | 1.40 |
Given that the expected return for David’s security is 14% and the riskfree rate is 2.5%, what is the expected return for the market?
- Option : B
- Explanation : The expected return for the market can be calculated using the following equation: E (Ri)= Rf+ β (E (Rm) −Rf) 14% = 2.5% + 1.80 (E (Rm) −2.5%) E(Rm)= 8.88%
